MBA head Bob Broeksmit talks about IMB victories ahead of the 2024 elections
In a new episode of the HousingWire Daily podcast, host Sarah Wheeler talks with Bob Broeksmit, president and CEO of the Association of Mortgage Bankers (MBA). The pair discuss the latest happenings for independent building societies (IMBs) during the election season, updates from the Federal Housing Administration (FHA)’s 203(k) loan program – which allows homebuyers to roll repair costs into their mortgages – concerns about the Basel III regulatory proposal and more.
Broeksmit starts the conversation by sharing his thoughts on Republican and Democratic interest in the housing market, after attending both parties’ conferences this year. He says the mere fact that housing affordability is at the top of the national agenda is a big step in the right direction for the sector as a whole. But Broeksmit also expresses skepticism about Democratic presidential candidate Kamala Harris’ down payment assistance proposal, which he considers unnecessary due to the existence of FHA loan programs with a 3.5% down payment minimum.
He says the industry’s problem has more to do with supply than demand, and he supports Harris’s policy of encouraging new construction across the US. Wheeler chimes in and says the pain of low housing supply is the White House after years of miscommunication.
The duo then discusses the FHA 203(k) changes and the effects on the overall housing supply. The problem with the 203(k) program, according to Broeksmit, was the previously low financing amount of $35,000, which isn’t enough to really help homebuyers. Recently the amount was increased to $75,000, and buyers can also finance consultants’ fees. The program increases overall inventory by incentivizing buyers to renew and add distressed properties to the store.
“We’re really excited about this as a way to get tired homes back into good condition in an affordable way through an FHA program to let owner-occupiers do this work,” Broeksmit says.
Wheeler then asks Broeksmit to share his thoughts on the recent Basel III reproposal and why it is beneficial for the mortgage industry as a whole. Basel III is a set of proposed regulations designed to improve regulation, supervision and risk management in the banking sector. It is intended to help banks survive the economic turmoil and ultimately provide more financing to qualified borrowers.
Basel’s full reproposal offsets what Broeksmit calls unnecessary changes, or “gold-plating,” of capital requirements to levels 20% higher than what is already required. The original proposal would have discouraged banks from offering loans to people with low incomes, minority groups and first-time buyers. But without the unnecessary gold-plating, all homebuyers have a better chance of receiving financing from a bank, he said.
Wheeler and Broeksmit then explore how the larger housing market affects IMBs. Broeksmit explains that high interest rates have an impact on these lenders by making it more difficult to take out mortgages. Federal Reserve Rate cuts will make life easier for IMBs looking to offer more financing this year, and he expects more rate cuts than the 50 basis point cut announced this week.
To close the conversation, Wheeler asks about the impact of artificial intelligence on the IMB community and whether the industry plans to embrace the new technology-focused landscape. Broeksmit says leading IMBs are already using AI to identify purchase and refinancing candidates. He believes that using AI for these purposes is critical to preserving the portfolio and quality of service.
